Mounting Evidence

One of my favorite Mungerisms goes a little something like this:

1. Blowhard Gertrudes his remarks with a comment much like "I don't know much about formal economics, but..."
2. Blowhard blows. Hard. What follows can be summarized as a fusillade of economic ignorance.
3. Munger serenely looks the blowhard in the eye and responds, "dear sir, I believed you when you said that you don't know much about economics. But then you went and proved it. Kudos to you."

Of course, most blowhards aren't members of the most august chamber of Congress, assembled.

To cut to the chase:

Bernie Sanders favors raising the Federal minimum wage to fifteen bucks an hour.

Bernie Sanders is simply appalled that youth unemployment is so high.

People, with politicians like this, why do we even have a civilization at all?

People, with politicians like this, how do we even have a civilization at all?

Of course, there's always the possibility that he knows exactly what he's doing. If you wanted a cohort of the young dedicated to securing the dominion of the sovereign, I could hardly sketch a better battle plan.

Skyjinks

NBC News reveals the TSA fails 95% of their QA tests. If you've played D&D before, you know what 20-sided dice look like. You also know what a 'natural 20' is. Basically, the TSA's THAC0 is so terrible they can only hit on a nat20. They'd get wiped by a random kobold patrol.

$4.6 billion is the 2015 TSA budget. $4.6 billion-with-a-b is how much we're spending on petty grope-happy bullies who fail stupendously at the modest task which is their charge.

I don't know about you guys, but I have some pretty serious buyer's remorse over here.

There are natural limits to political kayfabe. The TSA has exceeded them. It is time to disband these Keystone Kops summarily and without delay.

NCAA

Missouri Senator Claire McCaskill:

Congrats to Duke,but I was rooting for team who had stars that are actually going to college & not just doing semester tryout for NBA.
— Claire McCaskill (@clairecmc) April 7, 2015

Duke Political Science Professor Meat Mountain Mungowitz:

Odd for Sen. McCaskill to critique Duke, w/ consistent 100% grad rate. http://t.co/aYCPi8Z9Q4 But maybe I just prefer Sens who can read
— Michael Munger (@mungowitz) April 7, 2015

 And

Over last decade Wisconsin's men's basketball GSR consistently less than Duke's GSR. So Wisconsin just exploits its players, and LONGER.
— Michael Munger (@mungowitz) April 7, 2015

Exploits?

@Spivonomist "Oh, no, we can't pay you. It's a RULE. Oh, and you won't graduate, either." DEF'ly not EE.
— Michael Munger (@mungowitz) April 7, 2015

"There is a great deal of ruin in a nation." -A. Smith

NCAA is a bit like a lottery. You get a break on tuition for a shot at the NBA. In return, the players provide an extremely valuable service to punters at highly-subsidized prices.

I'm curious though: is there an implied bait-and-switch? The decision to pursue a career in the NBA is made at a very early age. To be a pro athlete, you have to commit well before the legal age of consent. If you're not on the court day in and day out starting from elementary school, you probably won't hack it. Implied promises of fame and fortune lead kids into a rent contest.

Then again, politics is also a zero-sum rent contest. There are only 100 senators. If we seek to discourage hoop dreams, it's only reasonable to discredit the offices of state and actively shame anyone so dishonorable to seek election.

Now that's a euvoluntary exchange I can get behind.

Death Star is better than Exit is better than Voice

I like rules that generalize. That is to say that I place some special value on non-discrimination in Law. If there must be boundaries on human behavior, then the boundaries must apply equally to everyone in society. No one, no matter their birth nor station should enjoy exemption from the Law. If I'm not allowed to park in front of a fire hydrant, neither shall the Emperor of the Han.

I am the first to admit that this meta-value is idiosyncratic. It comes to me partly from social norms carried over from childhood (fair play on the playground), partly from an affinity I have for the Aristotelian tradition (proportionality uber alles), and partly from a curious American disdain I retain for hereditary political elites (boo titles, boo emoluments of state). Moral intuitions like this are just another turtle: somewhere down the rabbit hole, even the most exacting rationalist is obliged to resort to an aesthetic preference.

To be consistent, shouldn't I extend my fondness for universality to the aesthetics underlying others' meta-values? If someone genuinely believes that a particular few European families have been specially selected by God to enjoy privileges not afforded commoners, or that police should be exempt from the laws they enforce, or that people have no presumption to life or liberty if they happen to be born in another country, by my governing meta-principles, how do I gainsay that? What if a fellow constituent wholly rejects the Original Position thought experiment altogether? What if the set of shared values is null?

When pondering an exchange, non-transaction is perfectly euvoluntary. I wouldn't, for example, purchase a horse saddle at any price: I get no benefit from such a thing and it would take up valuable space in my house. At the tack shop, a gracious "no thank you" is as mutually agreeable as a "yes, please." Politics happens exactly where "no thank you" is not permissible. The closest thing we might imagine to a euvoluntary state would be ruled by unanimity. Such a state would probably be either very small, or very very federalist, neither of which are stable options when the median constituent seeks to consolidate political authority. In theory, I can imagine euvoluntary politics. In practice, my dreams fail me.

When humanity starts to colonize space, it won't be because we seek to live harmoniously among the twinkling stars; it'll be because we're fed up living with these assholes over here. SpaceX: the next best alternative to a Buchanan-Tullock Utopia.

White Hat vs Rent Seeking

Firms will often test security measures before rolling them out. They'll subcontract so-called "white-hat" hackers to test the systems to see how easy it is to gain entry. The White Hats then report back to the firm the results of their investigations so that changes can be made, patches applied, and systems secured.

Public Choice economists, along with a number of other disciplines, have noticed that quite a bit of regulatory legislation ends up benefiting the industries under regulation. Sarbanes-Oxley, for example was ostensibly intended to discipline naughty firms engaging in naughty accounting practices. The result of SarbOx, instead, is that it puts an enormous regulatory roadblock in front of any firm seeking to grow beyond the capacity that will trigger its requirements. It creates, in the parlance of economists, a barrier to entry, allowing incumbent firms the latitude to behave more like the textbook monopolists your econ 101 professor warned you about.

White Hat hacking is quite euvoluntary indeed. It's an excellent service that helps enhance customer confidence and reduces risks inherent in electronic commerce. Well, at least when it works as advertised. What do you think about a legislative equivalent? Politics is exchange, after all. Right? How about having a few independent contracting firms take a stab at finding all the "unwanted" loopholes in a piece of legislation and showing how to exploit them so that bills can head back to committee before they hit the floor? Wouldn't that be in the public interest?

Well, if you agree with Zach Weiner, yes. If the purpose of the legislature is solely to act in the public interest, then it'd be great to dot all the i's and cross all the t's before voting. But if I'm right and the legislature is chiefly Humean, there will be absolutely no interest in independent regime arbitrage hacking prior to the release of legislation, as it is not in the unspoken interests of the political elite.

At least, this is my prior belief. I'm not exactly sure how you could test it unless you actually had a legislator's ear. I could say "I bet that within 25 years, there will be no equivalent to a legislative white hat org vetting proposed legislation," but that wouldn't really vindicate the Humean model of political economy, would it? In the meantime, I thought it might be a cute little thought exercise. A what-if to keep in mind for when Andreessen finally funds my comet utopia.

We Can Land On A Comet, But We Can't Admit Gruber Was Right

Sometimes life throws you a softball. Still trending on Twitter is the unintentionally hilarious hashtag #WeCanLandOnACometButWeCant, an ode to the wonder of the human spirit and the tragedy of grave misclassifications. Here's an example of one that straddles the line between tragedy and comedy:

#WeCanLandOnACometButWeCant stop making dickheads famous.
— Matt Burfield (@mattissotrendy) November 13, 2014

Rosetta and its probe Philae are very impressive engineering feats, which is to say that they've demonstrated their programmers' keen grasp of physics, chemistry, navigation, math, and sundry other deterministic disciplines. Unfortunately for anyone with a troy ounce of taste, including both myself and Mr. Burfield above, dickheads continue to achieve and maintain fame.

The fame of dickheads is not an engineering problem; it is a social problem.

Social problems arise because people have agency. They can make decisions of their own accord. And in a free society, we oblige ourselves to tolerate the banal, crass decisions of others because the alternative is the sort of totalitarianism seen in regimes like the DPRK. If you're a working class American you would no more want to be forced to attend polo matches against your will than a Rhode Island elite would enjoy being forced to go to NASCAR races unwillingly. Orwell was close, except the boot stomping on the human face forever has a Nike logo and is at the 30 yard line.

Ergo, Gruber. The other news of the day (which is hardly news) is that PPACA architect-in-arms Hans Jonathan Gruber took command of Nakatomi Plaza was caught on tape on three occasions making the uncontroversial (in the social sciences, anyway) claim that voters are stupid (or irrational, or ignorant, or mood affiliation to that effect). Tyler C comments here, B. Caplan retorts here. Me? I think both of them are right. Tyler says that Gruber broke political kayfabe, and that since he's not a career politician, he shouldn't be expected to lie continuously and adroitly. Bryan says that lying is wrong, and that since the constituency insists politics are treated as an extended morality play populated by cartoon characters, any contribution to the charnel house of deception is unethical. To me, these two opinions are not even remotely incompatible. Tyler's looking at an individual's rational response to the incentives he faces; Bryan's critiquing the entire institution, while condemning a man for taking part in it.

My unreliable utopia has no famous dickheads, no kayfabe in politics, and is probably well-suited to life on a comet in deep orbit. Until I can strap myself to the shuttle pod of Rosetta II, I'll probably have to accept my BATNA of the injustices of asset forfeiture, the militarization of police, the relentless non-stop low-grade wars abroad, the inhumane treatment of peaceful immigrants, the grotesque war on drugs, the awful criminalization of sex work, and whatever other petty tyrannies men and women in positions of political authority can muster. I suppose it could be worse. At least America hasn't gone full Venezuela.

Yet.

404: RITUAL NOT FOUND

In a post I haven't yet roused myself to critique, Double-D identifies the activating element of the sacred spaces among us. 'Tis ritual. Even with the priest and the congregation assembled inside the church, the assembly is incomplete without the Eucharist.

Yesterday, the United States held its annual Mass dedicated to Veterans, living and dead. I urge you to recall that what we in the US call Veterans' Day is referred elsewhere in the Anglophone world as either Remembrance Day or Armistice Day, a day to remind citizens of the horrors of the Great War, the War to End All Wars, known retrospectively as World War I. Poppies are laid out row on row outside the Tower of London, a grim reminder of the oceans of blood spilt to slake the vanity and lust of long-dead political elites. These displays of public humility constitute a solemn ritual to remind the constituency of the costs of war, specifically the war that saw the rise of mechanization and the unspeakable horrors of Better Killing Through Chemistry.

Virginia Postrel includes a chapter on the Glamour of War in her latest book. By the end of WWI, the pre-war glamour of courageous gentlemen fighting a just war against heathen enemies had largely worn thin. Both sides were threadbare, weary of sending its boys to die, choking in the cold mud. The Armistice and its remembrance bid fare thee well to the kayfabe-drenched lie that there was glory in the stubborn trenches at Ovillers-la-Boisselle. Now, it isn't that Veterans' Day is a cheery, breezy glee-filled romp, but the mood affiliation is much different. We remember the sacrifices our veterans have made, often with the rider that these sacrifices were for the common good, or to secure the blessings of liberty, a curious conceit not immediately evident in the experience all Americans. I report that my time in uniform has done precious little to stem the rise of abusive civil asset forfeiture practices, or to halt the self-evidently erroneous decision in Kelo or curb any of the other many tiny assaults against the Constitution I vowed to defend against all enemies, foreign and domestic when I took my Oath of Service some 23 years ago.

Yikes. Has it really been that long? It is to sigh.

Recall your Hume. The sovereign who seeks to encrease his dominion abroad shall avail himself of whatever means he might pursue to obtain the service of the constituency. He will strip them of their luxury, he will wheedle their children, and he will ensorcel their patriots with the kayfabe of glory and honor. Armistice Day was the one day of ritual during which that the nation took to the ritual of breaking kayfabe, if only for one somber pass of the calendar. Schoolchildren recited In Flanders Fields, and the VFW sold poppies alongside their brothers-in-memory at the American Legion.

Then the tone changed in 1954.

Imagine what the year might look like if Congress would authorize separate days each year to commemorate the fallen in each of America's conflicts, to reflect on the dire toll paid on that august body's behalf by the blood and bone of America's sons and daughters. Imagine if you will, whether or not US Secretary of State Madeleine Albright might have uttered to General Colin Powell her infamous 2003 remark "What's the point of having this superb military that you're always talking about if we can't use it?" in an America where we all partake in the ritual of reminding ourselves of the bloody cost of war. One day for each war. One day to scrape the veneer off the relentless glorification. One day to reflect. One day to remember.

One day to indulge justly-deserved, messily earned regret.

Election Day Wrap-Up

Ref: http://mungowitzend.blogspot.com/2014/11/the-final-countdown.html

Hillary Clinton was Correct. Businesses Do Not Create Jobs

Mrs. Clinton recently drew a little fire for the following comment made while shoveling red meat to her base (Reason has the video clip).

Don't let anybody tell you that it's corporations and businesses that create jobs. You know that old theory, trickle-down economics. That has been tried, that has failed. It has failed rather spectacularly. One of the things my husband says when people ask him what he brought to Washington, he says I brought arithmetic.

My excellent friend and professor Don B has already dismissed this remark as flippant political kayfabe, worthy of mention only to establish the economic illiteracy of a politician who later claimed that it was the benevolence of Prez 42 that so generously offered raises to the workers of America.

I'd like to parse the statement a little closer, if you'll indulge the conceit.

(1) "Don't let anybody tell you that it's corporations and businesses that create jobs."

This is correct. "Corporations and businesses" do not exist to create jobs. They exist to overcome the difficulties of contractual organization in order to produce. Jobs are a byproduct. If a corporation or business could produce exactly the same output with zero employees, they'd be insane not to. If a firm is operating correctly, they're matching labor and capital margins in order to destroy jobs. This is a very good thing: it means that firms are being creative, finding new ways to better and more cheaply satisfy customer desires. This also frees up labor to find new market opportunities.

Adam G's Umlaut piece this week is an ode to the Internet. It is very good, but it would have been utterly unfathomable even a couple of generations ago when something like 80% of Americans were farmers. The destruction of jobs has been a truly lovely thing, allowing the flower of modernity to blossom in serene comfort under plentiful, warm electric light.

(2) "You know that old theory, trickle-down economics. That has been tried, that has failed."

Also correct. There is no such economic theory called "trickle-down," but there is some political kayfabe that uses the term. The economic argument is that lower marginal tax rates (particularly capital gains taxes) will reduce the cost of borrowing, allowing firms to grow and produce more stuff. There's nothing in the economic theory that has anything to say specifically about the quantity of labor employed. The theory predicts productivity. Since Mrs. Clinton was referring to employment specifically, it's not unreasonable that when she claims "failure," the metric she's using is cyclically-adjusted total civilian employment (or an alternative measure; follow IW for KE's excellent labor market analysis). Since "trickle-down economics" was interpreted as "lower marginal tax rates on earned income," rather than capital gains, and also included a whole host of other regulatory interventions, it probably did not produce the effects it was never intended to have, apart from the economic ignorant ravings of career politicians.

(3) "It has failed rather spectacularly."

Political kayfabe without exaggeration is hardly political kayfabe at all.

(4) "One of the things my husband says when people ask him what he brought to Washington, he says I brought arithmetic."

I'll leave this one to Adam Smith.

The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.

 Economics is not arithmetic, people. But if you expect a political elite to speak otherwise, then perhaps you need a clearer idea of the incentives they face and the institutions that govern their pronouncements. From the point of view of the career politician, their pronouncements are not euvoluntary; a mis-utterance could reduce them to a terrible BATNA of actually having to work for a living.

THE HORROR

O LAMENT

THE HORROR

Breaking Stupid

Robust political institutions protect constituents from venal, stupid, craven, or amoral elites. Constitutional constraints on the limits of political authority achieve this, as long as the constraints bind effectively. When loosening these shackles for transient gains, I urge you to remember that constitutional constraints exist to guard against mayhem wrought by men like these.

Political speech is more akin to the kayfabe of professional wrestling than to anything else I can imagine. When politicians break kayfabe, as in this instance, the corruption that suffuses the entire system is laid bare.

Politics is exchange, but it is almost never euvoluntary exchange. Use precautions.

h/t Double D

Politics as Euvoluntary Exchange

Paul Collins Broun, Jr. is the U.S. Representative for Georgia's 10th congressional district, serving since 2007. He is a member of the Republican Party and the Tea Party Caucus.

"Democracy is the theory that the common people know what they want, and deserve to get it good and hard." - H. L. Mencken

Contrast these comments with Adam G's Umlaut piece today. The honorable gentleman from Georgia is pretty clearly uninterested in preserving a liberal order underpinned by a dedication to the public virtues of tolerance and pluralism. And his constituents like him enough to keep re-electing him, perhaps because the age of the earth is relevant to public policy somehow.

Politics as exchange. When one party to an exchange is non compos mentis, can the exchange be euvoluntary? What about when both parties are non compos mentis?

Georgia politics aren't any of my business until they start interfering with national-level policies. It might be time to review the strengths and weaknesses of adhering more closely to a federalist system. Popular democracy has done much to erode the constitutional constraints on the power of the central legislature. It's not too late to rebuild the ramparts. Even if you agree with Rep. Broun on the specifics of his claims, I'm sure you can name a politician or two in DC whose worldview you find odious. Take back your republic.

h/t Ceph

Social Capital or: How I Learned to Stop Being a Jerkass and Love the Gaming Industry

Ronald Coase's great contribution to the theory of exchange is that bargaining over conflicts produces results consistent with the First Welfare Theorem: with a non-null bargaining set, disputants should be able to settle on a mutually-satisfying outcome with no Pareto-improving offers to be made.

Ideally.

In practice, what typically gets in the way is pigheadedness, pride, churlishness, grudges... politics if you will. Or sometimes, there really is no mutually-satisfying resolution available.

Politics is a skill. And like any skill, it requires practice. So when I read this overview of (can we please stop with the tired suffix already?) GamerGate, I couldn't help but think of Wednesday's post. What should have been a minor tiff over something as insignificant as video game journalism and inclusiveness in a hobby that is chiefly enjoyed in the privacy of one's own home has bafflingly erupted into a full-blown row including rape and death threats. It is difficult to reject the hypothesis that some elementary conflict resolution skills would greatly improve the conduct of this melee.

Video games are stereotypically a pursuit of the young. I don't see too many graybeards embroiled in the gnashing of the teeth on display here. If this is a cohort problem rather than a problem of excessive callowness, then the zero-tolerance authoritarianism ascendant these two decades or so hence have done our politics no favors.

#GamerGate is merely the vanguard. Winter is coming.

With Apologies to K. Grier

People, if crap like this can happen, why do we even have an electoral college? (NSFW?)


"Politics as Exchange" is the theme of the Virginia School of Political Economy. I'm not sure what exchange is on offer here, but it sure don't seem like a euvoluntary one.

The Enigma of Ford

Rob Ford, the "disgraced" mayor of Toronto, still enjoys an order of magnitude more public approval than the US Congress (I know, I know, apples to oranges). This despite rock-solid evidence that he's smoked crack while in office.

There was, in Tudor England, a habit of old that on the Twelfth Night (as popularized by Shakespeare's eponymous play) of Christmas, the night before Epiphany, peasants and nobility would swap roles, the former dining on... well, I'll let Dan D'Amico explain:


If you get the baby (or the bean, or whatever local variant you like), you get to pretend to be a lord until sunup. @danarchism's right on the money; cultural, social... human capital is the name of the game. This festive celebration obliged feudal constituents to adopt some variant on the very sort of sympathy championed by Adam Smith in his Theory of Moral Sentiments. If only for a day, the (un?)lucky peasant would have to don the pantaloons of the lord of the manor and hear the petitions of the governed. It was a great, rollicking joke with a great rollicking punchline and a great rollicking serious message embedded within. Using my Pete Leeson spectacles, Twelfth Night was an institution that, as cheaply as contemporary political technology allowed, permitted greater social stability.

And then there's this guy:



The gentleman behind the wheel is Deadmau5. He is a musical whiz, a Giorgio Moroder for the opening act of the 21st century. And he puts up a 30 minute video of him tooling around with his crack-smoking mayor.

Rob Ford governs as if every night were Twelfth Night. AND THE WORLD IS A BETTER PLACE FOR IT.

Politics minus governance equals politainment (plus ζ, some residual). Three cheers for the City of Toronto to have the courage to admit that politainment is valuable. The grimmest moments in human history were characterized by politics taken too seriously.

I'm none too fond of transactional theories of the state. The analytical fiction of the social contract suffers from Arrovian impossibility problems, and no written constitution can ever hope to bind an active sovereign ruling a clamorous constituency. Despite my reserves, I do still believe that voters basically get what they ask for, within a standard deviation or so. And in Toronto, they've asked for some non-standard deviance. And it seems they've gotten exactly what they want.

Long live the king.

In EE terms, this tests Toronto's Ford on the Shughart/Thomas scale, and I think it finds in favor of euvoluntary institutions. If anything coercion flows in the opposite direction. Conventional morality, conventional politics would have this guy (or Marion Barry before him) out on his ear. Yet buoyed by popular support, he thrives in office. Huzzah!

Samsplaining Kayfabe

The idea is not original to me, but I have bothered myself to reject the null hypothesis that I am not primarily responsible for the specific neologism "political kayfabe." I like the term because what it represents is immediately obvious to anyone even casually familiar with the many tropes of pro wrestling and with a layman's interest in political science. It's delightful shorthand for all the bluster and bravado on the pinewood stage of Congress, and it subsumes nicely some of the more important conclusions of both the median voter theorem and Duverger's Law (sorry, I can't find an ungated link to Riker's '82 paper). It's also a good way of capturing the spirit of playacted audience participation. Kayfabe is chiefly characterized by feigned sincerity, particularly applied to rivalry. Ever-so-slight differences in opinion are greatly inflated in both importance and magnitude to the public, while backroom deal-making, bedfellowship, logrolling, and mutual backscratching is writ in Congressional ink along the dotted lines of each bill that squirms out of appropriations.

Kayfabe is not:

• Baldfaced lying. The audience won't buy anything that threatens their willing suspension of disbelief.
• Scapegoating. Kayfabe artistes conspire to create scapegoats, but only as a by-product. It's not essential to the practice.
• Conspiracy. Well, not conscious conspiracy anyway. Kayfabe can arise naturally as a result of the incentives of a winner-take-all electoral process.
• Insincerity. Not necessarily. Kayfabe demands the delicate craftsmanship of paring slight, legitimate differences of opinion, exposing and magnifying tiny fissures. It's the art of re-scaling the Y-axis, so to speak. 
• Sincerity. Not necessarily. The ultimate ends of kayfabe practitioners (be it soon parting a fool from his money or encreasing the dominions of the sovereign) tend towards sincerity, but typically in the narrow, limited sense of self-interest. Much of the difficulty in parsing political speech is that it can be difficult to distinguish between a skilled kayfabe practitioner and an honest believer. Fear the latter more than the former.
• Propaganda. Propaganda can be a tool of kayfabe, but it's also a tool of tyrants and totalitarians. 
• Coercion. Kayfabe knocks on your door. Tyranny kicks it in.

Kayfabe is:

• A means to an end. Strategic behavior suffuses politics. Particularly in the short run, budgets are fixed, and artlessly attempting to claim a portion of a fixed asset is doomed to failure. Without wheedling, conning, and fast-talking, without spirit, bravado, and a touch of derring-do. would-be politicians end up filtered out pretty early on in the selection process.
• Participatory. Axiom: you can fool some of the people most of the time; you can fool most of the people some of the time, but you can't fool all of the people all of the time. Lemma: unless they want you to. In The Power of Glamour, Virginia Postrel makes a very careful distinction between glamour and charisma. Glamour is good for winning elections; charisma is good for getting your way. They are separate but related skills. Kayfabe is related to both. Charming your audience [constituents|potential constituents] is valuable, as is charming your colleagues. However, charm fades quickly when folks refuse to play the game. Kayfabe can only persist when it's mutually felicitous. 
• Durable. Probably. This is a more tenuous claim, but audiences enjoy being in on a shared deception. We all know that Penn and Teller aren't actually shooting each other in the face, just like we all know that there's scarcely a dime's difference between the dominion we labor under either Team Red or Team Blue, but if someone (not unironically someone like Penn or Teller) pulls the lid off the lie that is partisan politics, you can probably rest assured that either someone will hastily restore its integrity or will find a near-identical replacement (see Ch. 4 of Hinich and Munger for more).
• Entertainment. One of the more tiresome (if accurate) neologisms that happened in my lifetime is "infotainment." Yes, I read Cracked.com regularly, I even watch clips from The Daily Show from time to time. I'm also aware of "edutainment" as illustrated by the gloss-magazine character of the modern university textbook (including even my favorites). If we're being thorough, we've also have coined "polititainment" and noted its prestigious lineage from Cicero's grandiloquent orations through the Fireside Chat, Nixon's "sock it to me" mugging, Clinton's sax, and the entirety of Rick Santorum's public career. Politics minus governance equals polititainment. And just like the Solow residual, that's where the lion's share sits.

Kayfabe on its own is neither harmful nor harmless. Its harm in the intents of the practitioners and the outcomes of their policies. It's deadly fun, and exposing it is as dangerous as it is futile. But it's a term that has a meaning, even if its true nature is difficult to scrutinize, even if it's an eyeball attempting to gaze upon itself. I urge you to use it, but to use it correctly.

Cross-posted at Sweet Talk.

Partisan Rancor Meets Simple Charity

Leering at me from an underlit recess at the end of the hall is the beetled brow of my hunched American ancestry, twinkles of anger and disappointment sprinkled atop a foundation of cold contempt. I have failed him. I have allowed my beloved country which he fumed, hewed, hacked, and slashed from its dusty wooden bones to descend into petty, fulminous bickering over clear, uncontroversial, basic humanitarian duties.

There are children on the southern border. Children without homes, children fleeing violence. Children that have braved perilous journeys of many hundreds of leagues, placing frail hopes on the slender reed that strangers in the north might breathe a puff of air into the rusty bellows of simple charity.

Perhaps these wayward sons and daughters should have done their homework first. Perhaps they should have realized that since they're apt to grow up and register with the Democratic Party, they're not welcome here by the opposing faction. Perhaps they should have realized that since they can't hold a job (ever?), they're a net drain on the already debt-ridden public fisc. Perhaps they should have been ever so slightly more diligent and discovered that the curable diseases they've brought with them have to be treated by doctors who could be more gainfully employed tending to people with the good sense to be born north of the Rio Grande.

Because our political equilibrium is so frail and our need for military might so urgent, we just can't possibly afford to let our fellow citizens exercise basic private charity. It is imperative that we send these children back to the chaos they went to great lengths to escape. The Republic could not stand otherwise.

Sweet Jumping Hotcakes, people. This is why we can't have nice things. Look, I get it, migration is not euvoluntary. In this case, we're neck deep in Locke's Venditio: these kids are the proverbial foundering ship at sea, in dire want of an anchor. You may or may not have an individual duty to assist, that's between you and your conscience. But to claim that you have the moral authority to stand between your fellow citizen and their moral imperative to help for reasons of partisan politics seems ...well... slightly monstrous, don't you think?

Examine your BATNA. Examine theirs. Exercise analytical sympathy. It's not that difficult. Recalculate your moral intuitions.

And then face the inevitable conclusion that if this is the best we have to offer refugee children, some of them under ten years old, then the prospects for meaningful immigration reform will be dashed on yon rocky shore until the median US constituent finds a better heuristic for the proper role of the sovereign.

Solon wept.

Who's Afraid of the Big Bad Unfunded Liabilities?

What's the right way to think about tax dodging?

It isn't always that easy for me to think about public finance. The combined US budget at local, county, state, and federal levels easily tops a trillion bucks, and that's without any "temporary" spending. That sure seems like a lot, but I'm not sure what to compare it to. I have a similar problem thinking about budget shortfalls. Is the FY 2014 budget deficit of $564B too much? Too little? Just right? Compared to what? Moreover, how can the typical taxpayer know that she's getting her dollar's worth out of the spending done on her behalf?

Making it more complicated is that a lot of the projects (defense spending especially) conducted on behalf of US constituents notionally generate value well into the future. What's the PDV (present discounted value) of a new carrier group? And how about debt service? At very low interest rates, service costs are extremely sensitive to small rate changes, meaning that the cost of debt financing is hostage to the myriad forces that dictate borrowing costs (it ain't just the Federal Reserve, in case anyone's told you otherwise). Heck, debt service problems are for money that's already been borrowed. What about money that the political elite has only promised to borrow?

Since I have trouble thinking about these things as they are, I've made it a habit to disregard the linguistic fluff and use a common word to describe public spending not covered by current taxes. That word is "promise." Debt is a promise, one backed by the weight of the common law. You are contractually obligated to pay your debts. Congress is constitutionally obligated to pay the debts of the nation. Debt takes precedence over all other obligations in bankruptcy (unless politically favored constituents can jump the queue under the aegis of a duly elected government that proves comfortable disregarding the rule of law). But debt is far from the only promise you (or Congress) can make. You can promise to walk the dog, to take the kids out for pizza, to buy your wife a new car after a fallen tree destroyed the old one, or to replace the batteries in your smoke detectors (when was the last time you checked yours?). Congress can promise to pay for your retirement, buy your prescription drugs, care for your wounded veterans, or secure your borders. These are also promises, but they don't have the same common law support that debt enjoys. They're statutory promises; statutes can be overridden or repealed. There's no stare decisis in the legislature.

But that doesn't mean that they're not credible promises. It's bizarrely hard to cut government programs. Unfunded liabilities are, for all practical purposes, as good as actual debt obligations. Maybe more so, since programs like OASDI and Medicare are far more of a political third rail than, say, making Treasury bondholders take a haircut.

But something else occurs to me as well: there are a number of shadow promises that haven't even been made yet that make it yet harder for me to think clearly about public finance. The looming geriatric tsunami will bring with it lots of new clamoring for things that'll make Boomers' retirements more pleasant. Add to that the very real probability of new programs to tackle ballooning student debt issues, and it shouldn't take too much imagination to conclude that the standard metrics of Debt/GDP ratios (which is a dumb metric anyway, what with the comparing stocks to flows) and the like grossly misstate the nature of the problem: an over-extension of promise, explicit or otherwise.

Hedging against a future of Promises Gone Wild is either prudent or paranoid, depending on whom you ask. Either way, the disquiet that tends to accompany broken promises is unpleasant whether or not you've pinched your pennies and stitched in time. In the language of EE, each of the three types of promises (debt, unfunded liabilities, and shadow spending) threatens to impose a fairly substantial negative externality on citizens, particularly way out in the tails of the distribution. It is quite natural to conclude that there exist some people who would prefer not to subject themselves to the hassle.

So here's the bit that's been bothering me. I have the impression that the typical voters considers people who avoid the inevitable costs of zealous promise-making to be cowardly, unpatriotic cheats. FATCA legislation stands next to no chance of being struck down, and for all the noise partisan Americans make about renouncing their citizenship and packing their bindle for Canada should their guy lose the election, if someone actually up and does it (particularly if he's wealthy), scorn inevitably follows.

So the question: is emigration euvoluntary? Do the reasons for emigration matter? Rather, do the reasons for emigration matter more than the consequences? The treasury is still out the same receipt whether or not someone leaves because she married a foreigner or if she left in protest of a Republican in the Oval Office. How important is the cheap fluff talk in determining the moral intuitions? Is tax dodging different than routine emigration? Why or why not? What does this imply for strategic public talk?

[Not] In Congress, July 4, 2014

HL Mencken famously translated the Declaration of Independence into vulgar American English in 1921 (linky). But that was 1921, and quite a bit of the hokey-pokey Gilded Era slang has become nearly as indecipherable as the 18th century text upon which it was drafted. To periodically refresh the Tree of Mockery, I spill some of my own blood. Here then is the D of I for the euvoluntary exchangeur. Original text below the break, in red.

The unanimous Declaration of the political elites of the thirteen united States of America,

Enough is enough. I have had it with these monkey-fighting political arrangements on this Monday-to-Friday colony. Look people, we're honest folks over here, so just to play it safe, let's roll through the reasons we're sending a breakup letter to the Crown. Doing otherwise is just plain callow, amirite?

This isn't a forum for dissecting religious belief, so when I write "Creator" or "God", it doesn't much matter whether you think of a Michelangelo fresco or the Flying Spaghetti Monster. What's important is the substance: some power above the temporal authority, out of reach of the sovereign has granted everyone these elementary unalienable rights (that means that you can't trade away these rights: you don't "own" them in the same sense you own the trampoline in your backyard): Life, Liberty, and the PURSUIT [emphasis added] of happiness. The purpose of a government is to make sure these rights are protected, which should be kind of obvious once you think about it for a moment. Furthermore, the ultimate authority for any Government is the constituency. Government serves the will of the people, not the other way round. Consider for a moment what when Government falls derelict of this divine duty, folks have the right to declare the sovereign's charter void and to draft new terms. Of course, since we're not a disorganized rabble, we respect that long-established Government shouldn't be overturned for flimsy reasons. I mean, think about it: if every petty injustice called for open revolution, there'd be no end to the bloodshed. Every second a Soldier spends in uniform is a second he can't spend at a useful, productive job, making other people's lives more rewarding. At best, revolt mitigates a worse evil. Add up (and discount) all the net evils done by a tyrant or a despot, and compare that to the net evils perpetrated by the next most reasonable alternative. If that difference is greater than the cost of overthrow, then bam: you've got just cause for war. I will now prepare for you a brief list of the reasons why this is now the case. Here are the facts of the matter in no particular order. The King of Great Britain has:

He has vetoed a bunch (a peck? a bundle? what's the collective noun here?) of legislation that would have been otherwise pretty good for the public.
He has prevented urgent local and state legislation from being passed, and even when it manages to get through, it languishes in probation indefinitely.
He offers the following "deal" to large districts of constituents: give up your claim on representation in the Legislature and I'll pass your law.
He convenes the legislature in the middle of nowhere, Florida (as if just regular Florida weren't bad enough). This is done to strong-arm Legislators into compliance.
He just up and dissolves any Legislative body with the temerity to oppose his rule.
He hems, haws, stalls, and stifles any attempt to re-organize previously so dissolved Houses of Representatives. The constituents of these interregnum places face the same sort of anarchy that Bill Murray warned the NYC mayor about in the first Ghostbusters movie: dogs and cats living together, etc.
He closed the borders, and let me tell you, we're hurting so bad for immigrants that some of the people living here have (horrifically) resorted chattel slavery [including the author of the original document!].
He has refused to appoint judges (or at least approve legislation for how judges are selected) where they are desperately needed.
He keeps the judiciary dependent on his whim for their salaries.
He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.
He has kept a standing Army in peacetime. I... I just can't even with this one. Come on, people.
He has given Soldiers immunity to civilian law. Totally not making this up, you guys.
He compels us to obey foreign statutes. Remember that whole "ultimate authority" thing earlier? A foreign sovereign does not rule with our consent, bro.
For, get this, using our houses to quarter his troops.
For staging mock trials for his Soldiers, pretty much letting them get away with murder.
For not letting us trade with the rest of the world. You know, like we do to our enemies before we bomb the bejeezus out of them, or do to ourselves to "protect domestic industries". Yeah, I'm rolling my eyes too, dude.
For imposing taxes on us without our consent.
For suspending trial by jury.
For hauling us off to stand trial overseas on trumped-up charges.
For disregarding common law and the law merchant in lieu of rule by fiat. Or as Bill Easterly puts it, the Tyranny of Experts. Yikes!
For revoking our local and state Charters, and nullifying our local and state Laws.
For voiding our local Legislatures.
He has waged war against us, his own alleged constituency. Wow.
He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people. Like a Viking. So now you better stop and rebuild all your ruins, for peace and trust can win the day, despite of all your losing.
He hired a bunch of foreign mercenaries and has set them loose among us, so try to imagine that you're an Iraqi with hordes of Blackwater employees running around roughshod. That's what it's like right here. What kind of civilized ruler does this sort of thing? Even Genghis Khan had more temperance.
He has conscripted our own citizens taken captive at sea into his Armies. Again, not even kidding right now. This dude takes our people, forces them to join his Army, then sends them into battle against his own homeland. Not. Even. Kidding.
He has fomented civil unrest, including getting the "merciless Indian Savages" to raid us [SLW ed. I had totally forgotten this particular point of order. I have a sudden urge to wash my hands]

Mind you, this is a short list of grievances. Any time we try to petition for a relief of these (and other) grievances, we get bupkis. Nada. Zilch. Zero. We get the cold shoulder. That's the demeanor of a tyrant, plain and simple. England's King has decided to model his reign on Machiavelli's Prince. It is with great regret I inform you that no one sent him the message that that book was meant to be satire.

So, in the eyes of the Flying Spaghetti Monster Himself, we the assembled dudes of this Congress to hereby claim that these here Colonies are now free and independent states, and we no longer bear allegiance to the British Crown. We're starting our own country and we have that right because the King has decided that he's basically our enemy anyway, so why not just go ahead and make it official? We got each other, and we don't need you no more.

Suck it, George. [omitted]

Plato's Divine Maxim: Vapor in the Wind

(via Reason) On June 18 2014, Senator John Davison "Jay" Rockefeller (D-WV) addressed the dire issue of "Aggressive E-Cigarette Marketing and Potential Consequences for Youth."

ATSWTWT

Well, perhaps you shouldn't watch the whole thing. It's two and a half hours of Senate testimony. I'm sure you can find marginally more productive things with which to occupy yourself.

Okay then. According to Senator Rockefeller, it's bad to convince kids to purchase electronic cigarette products. I think the worry is that the kids will then consume these products and become addicted, leading to health problems later in life.

Let's assume for the moment that the good Senator from the great state of West Virginia has conducted a thorough critical review of the relevant medical literature and has come to this conclusion without a hint of bias. Assume also that the standard public choice problems of incumbent firms seeking to protect political rents by shouldering out upstart rivals by way of offering special inside information to political elites who are legally exempt from insider trading statutes does not apply in this case and that Hume's warning against a sovereign that seeks to encrease his dominions offers no useful guidance here. Assume, in other words, no knavery.

What policy follows? From the majority statement: "beyond the flavors identified in our report, refillable nicotine liquid that is marketed can be found in flavors that include 'Bazooka Joe,' 'Gummy Bears,' and 'Chocolate Toot See.'” Are these flavors less euvoluntary than "Grandpa's Phlegmy Lucky Strike Cough" or "Bottom of a Crusty Ashtray"? Even if candy-flavored nicotine is intentionally aimed at children (and smokeless tobacco has had flavored variants in their products for decades with little public outcry), shouldn't a careful analysis include consideration of likely alternatives? Remember your Demsetz: the task of analysis is to compare alternative real institutions against each other rather than against an imaginary ersatz world. Pretending that kids would simply abstain from behavior that parents and legislators disapprove of thanks to regulatory efforts is the very essence of the nirvana fallacy. Moreover, product bans, speech restraints, and enforcement efforts almost never properly consider the full extent of the public costs. Consider that every federal and state inspector hired to interfere with the sale of electronic cigarettes gives up the opportunity to participate in the productive economy.

Then again, perhaps I'm looking at this the wrong way. Let's think in terms of comparative advantage and the Coase theorem. Assume that parents don't want their children using these nicotine products for the few years while they have custody. Assume further that these parents are insufficiently competent to prevent their kids from obtaining and consuming these products. The marginal costs of organizing to restrict advertising and sales are lowest in politics. Convening a Senate hearing is plausibly cheaper than parents organizing for a vociferous campaign of public censure (again, under the assumption that the value of Sen. Rockefeller et al's time is sufficiently low). So why shouldn't parents take full advantage of the services their tax dollars purchase and subcontract a portion of their ordinary responsibilities? Isn't Helen Lovejoy political economy simply a matter of low-cost provision of parenting duties? Why are the politically protected rents enjoyed by incumbent tobacco firms morally relevant? What matters is keeping nicotine vapor out of the hands of tender, innocent children. You know, just like the way that Schedule I keeps marijuana away from teenagers.

Invoking "children" is a natural defense against Plato's Divine Maxim (never to use violence to his country no more than to his parents). Obviously, the sovereign shouldn't treat kids with the same jurisprudential consideration as adults. So how can the armchair political analyst distinguish between a legitimate concern for minors and a mere political fig leaf? For me, I slightly alter Plato's Divine Maxim thus: would I be willing to completely prevent my parents from conducting an exchange to slightly increase the probability my kid wouldn't conduct the same exchange? Nota bene, I assume that on average, my parents will tend to be more law-abiding and conformist than my daughter. For e-cigarettes? Paternalist please. If you're going to let parents opt out of vaccinating their infants against communicable diseases, you sure as heck have no standing to ban vaping. Jenny McCarthy's preposterous drivel is a far greater threat to public health than smoking substitutes. Drag her in front of a subcommittee and then maybe we can have a little chat about how America's parents are justified in assigning their nicotine prevention and cessation duties over to the greatest deliberative body in the world.

Of Medical Kayfabe

The Hippocratic maxim primum non nocere, "first, do no harm" is a fine pleasantry that offers little practical bioethical guidance. After all, the surgeon's scalpel harms the patient, so does chemotherapy, so does dialysis, and so does the insertion of a Foley catheter. If you've ever seen a code, there's no way you can conclude that no harm is done to a patient when rescuing from supraventricular tachycardia.

Medicine as she is practiced inflicts a little harm to produce a greater benefit. Physicians crack ribs asunder to insert stents, dice flesh to excise tumors, and pump cancer patients full of poison to shrink tumors. The sick and injured are necessarily poked, prodded, pricked, and punctured on the road to recovery. Yet that little phrase lurks in the wings, a wee moral beacon to help with the extremely tough trade-offs faced by doctors and their patients. First, do no harm.

Do no net harm is the easiest rescue of the nostrum. Yes, you may saw off a limb, but it's to prevent the spread of gangrene to the rest of the body. A little harm here to prevent a much greater harm there. Everybody knows that. It's obvious. What may be less obvious is that medicine is always and everywhere a matter of conditional probability. The harm suffered by a patient on the path to wellness is personal and subjective. Likewise, the benefit of improved health, the marginal contribution of a treatment, and the probability of effectiveness are all idiosyncratic, limited to the the best estimates a patient can summon, and always weighed against the opportunity cost of an intervention.

So here's my question. Does primum non nocere perversely influence the delicate economic calculus of medical intervention? If so, how does it bias intervention decisions? Most medical professionals I know opine that diagnostics are oversupplied (too many MRI scans, eg) and drugs are undersupplied (the FDA traps new drugs in approval hell for years while patients suffer and die waiting for a cure that may never come at all). Is the Hippocratic maxim a near-mode guide to help patients and their physicians agree on a course of treatment that almost always by necessity involves at least some harm, or is it a far-mode policy guideline for regulatory bodies imposing a strict precautionary principle?

Which interpretation leads to a greater flourishing of euvoluntary exchange?